Britons losing out by avoiding American investment, says Fidelity International

05 July 2007
British investors are missing out, Fidelity International has said, because they’re effectively dismissing nearly half of the global market by not investing in US equities.

Britain would rather invest its money anywhere else other than the world’s largest stock market, according to their interpretation of data from the Investment Management Association.

Fidelity International’s analysis shows that sales of North American funds accounted for just 0.63% of total gross ISA sales (just £5 million) in April of this year, the peak of the ISA season, whereas five years ago the sector accounted for 4.3% of gross ISA sales, with monthly contributions as much as £44 million.

British under-investment in the US stock market is a familiar sight, but this has increased recently, with Brits becoming ever more distrustful of the performance of US funds, which have delivered the lowest returns of any other sector over the last five years.

A primary reason for a lack of British faith in the American market is the weak dollar, which has lost 40% of its value in the last five years – it was worth 69p in 2002, compared to just 50p today.

In domestic terms, the dollar has performed on a par with sterling in the UK, with the Dow Jones Industrial Average and S&P 500 Composite returning 47% and 50%, compared with a similar 57% for the FTSE All Share in Sterling terms.

Bob Haber, Manager of Fidelity American Special Situations Fund is cautiously optimistic regarding whether or not Britain should be turning to North American equities or steering clear as they reach their highs, and says that concerns regarding the weakening housing market are offset by global growth amongst American companies.

“There are a number of companies which are continuing to benefit from global growth and I am finding opportunities in areas such as agricultural commodities. Here, demand is being driven by the 3 Fs: Food, Feed and Fuel. With the world population growing by around 50-70 million each year, the demand for food will continue.”

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